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You can find reports from our Investment and Research team, timely and informative financial planning topics from our Wealth Management team, and deeper dives on various important topics in our white papers from any team member. Read online, share with friends, or download for your convenience.

DrKarenHamad IMG 7863On May 19, the Allegiant Private Advisors team hosted a virtual presentation with our friend and guest Dr. Karen Hamad. 

Dr. Hamad is a double-boarded Internist and Pediatrician, a graduate of Tulane Medical School, former Sarasota Memorial Hospital (SMH) Chief of Staff, current Associate Program Director of the FSU Sarasota Internal Medicine residency program, and is now serving as the chair of the COVID-19 treatment task force at SMH.  

Dr. Hamad shared her insights and experience to help us gain a better perspective on what this crisis looks like from the "inside.” We appreciated this unique opportunity to hear directly from a doctor on the front lines of fighting COVID-19. 

Click here to view a recording of this special program

4 Ways to Mark Graduation while Social Distancing

EV9 9697 Melissa Final 250x200by Melissa Walsh, CFA, CFP®
Senior Wealth Advisor

As we honor our graduates this year, we sympathize with the fact many traditions to commemorate their special achievement with the full pomp and circumstance of graduation aren’t possible at this moment in time. Your Allegiant team is pleased to share unique ideas to send a warm congratulations to those we love over the airwaves and internet.

  1. Send a Video
    Invite your friends and family to record a simple message of congratulations to the graduate. Simply merge the videos, add some celebratory music, and post to YouTube or a private shared drive. Better yet - ask a young family member to take initiative to help. (That’s what I did!)
  2. Host a Virtual Graduation Barbeque
    Order delivery barbeque (or your traditional celebration meal of choice) to be delivered to the grad and other special friends/family. Set a time to enjoy the feast together on FaceTime, Skype, or Zoom. Add a few toasts to recognize your grad’s accomplishments!
  3. Take Part in the Graduate’s Virtual Graduation Ceremony
    Ask your graduate if you can dial in to any virtual commemoration. I recently attended a small ceremony and was very moved by the element of humanity that was expressed and shared over the internet.
  4. Plan for What’s Next
    Whether your graduate is heading off to kindergarten, college or beyond, planning for their financial success is a wonderful way to recognize their achievement and plan for their future.  Whether it’s funding a 529 account, helping with expenses, or increasing their financial literacy, we are here to help you every step of the way.

Please accept our sincere congratulations for the achievements of your friends and family! We are here for you on each step of your journey and invite you to send pictures of your graduate to your Allegiant “family.” In the meantime, stay well, friends.

Allegiant Private Advisors has increased the firm’s philanthropic contributions in response to the economic effects of the coronavirus outbreak. The Sarasota-based independent firm which provides fiduciary-level financial planning and investment advisory services has donated more than $50,000 to 12 nonprofit organizations in the local community over the past month. 

Allegiant Prinipals in front of Bloomberg at downtown Sarasota financial planning office

AllegiantPA Economic Dashboard Portrait May 2020This month we finally received confirmation of what we already know - U.S. economic activity has declined substantially. As I mentioned a couple of months ago, we were in a very unique position where we knew economic activity was going to decline sharply way before we could see the data to confirm it. While the data is not encouraging, it is backward-looking. Our focus is on the future. 

Economic Dashboard

Allegiant’s Economic Dashboard for May shows four red indicators and two green indicators. After flashing three red indicators two months ago, the Dashboard now solidly suggests we are in a recession. It will take some time for the official announcement from the National Bureau of Economic Research (NBER) but make no mistake - the quick decline of economic activity is severe. 

Phases of the Economic Impact

The official recession may not last long, but the total economic impact from the COVID-19 pandemic will be much longer. In order to better analyze the impact, we believe it is best to break it into three distinct phases. Phase 1 is the “Severe Decline” phase as many parts of the economy are shut down. This mitigate and contain phase is where we have been for the past 6 weeks. Now we are shifting to Phase 2, monitoring and adapting. During this “Initial Bounce Back” phase businesses begin cautiously reopening. Lastly, we will enter Phase 3, aptly named the “Road to Recovery” phase. Here growth will moderate from the initial bounce-back of Phase 2. During Phase 3 consumers and businesses will adjust to the longer-term reality of the new normal of living through a pandemic. 

ThreePhases May2020
While there are uncertainties around timing and intensity, we largely know what Phase 1 and 2 will look like. There is much more uncertainty surrounding Phase 3. After the initial bounce back will the economy continue growing? Is it stable and gradual growth or is it lumpy? How does consumer behavior change? How do businesses adjust? Will we have additional outbreaks? What happens to all the newly issued debt? There are many questions to answer over the coming quarters. During this time, it will be more important than ever to examine the new data to identify transition points. As I explained in Quadrants of Possibilities, economic data will remain bad for a while. More important than waiting for good data releases, we are looking for the data to transition from bad and weakening to bad and improving.

Markets are Forward-Looking

Markets have largely priced in the transition from Phase 1 into Phase 2. The intense depression level data of the past couple of months should begin moderating as the economy reopens. While the decline was quick and severe, the recovery will also begin sooner than most recessions. 

Stock markets historically bottom 4-6 months before the end of the recession. While this recession will be extremely bad, it may also be short due to the nature of the economic impact. If we assume the official recession only lasts for 2 quarters, then the market bottom on March 23rd could be the real bottom for this cycle. I realize this is a big assumption, assuming the recession is short-lived. But if America successfully reopens over the coming months, then the recovery will begin. 

Throughout this market volatility, Allegiant has taken many steps to insulate and protect your portfolios by becoming more conservative leading up to the major declines in March. Those proactive steps created the opportunity to play offense when values were lower. We moved swiftly every step of the way to take advantage of this market disruption. But we aren’t out of the woods yet. The successful transition to Phase 2 is largely priced into markets now. As such, we will be watching very closely and will continue adjusting your portfolios as the situation evolves. 

If you would like to see more data and charts about the economy and various financial markets, please click here to view our Monthly Insights book.

Benjamin W. Jones, CFP®, AIF®
CERTIFIED FINANCIAL PLANNER™️
President, Chief Investment Officer, Principal

The much-anticipated April employment report showed the unemployment rate rising to 14.7% as 20 million jobs were lost. The double-digit increase in the unemployment rate was the single largest monthly increase in history.

Chart Unemployment Silver Lining 5 13 20

While there is nothing good about losing 20 million jobs there is one silver lining in the report. Nearly 18 million of the layoffs are classified as temporary instead of permanent. As such, the ratio of permanent to temporary layoffs (black line) declined to an all-time low, meaning most of these lost jobs have the potential to come back over the coming months. While it by no means guarantees a V-shaped recovery, it is an encouraging sign. Looking back over the prior two recessions, a higher percentage of job losses were permanent than today; therefore, they inflicted more damage to the economy. We will be watching how this trend develops over the coming months as some of these layoffs may become permanent. 

U.S. Gross Domestic Product (GDP) contracted by 4.8% in the first quarter, marginally worse than economists’ expectations. The decline was largely driven by stay-at-home orders put in place during March. The largest part of the economy, consumer spending, contracted by 7.6% in Q1. Consumption of durables and services detracted 1.2% and 5.0%, respectively, from aggregate GDP. 

Q1 2020 Quarter GDP Report Chart

Business investment contracted for the fourth straight quarter. The Q1 decline was almost twice as large as any of the three prior quarters. As expected, businesses slashed structural and equipment related spending in response to COVID-19. The bright spot was investments in software as data center and networking capacity grew during the quarter.

Once a significant piece of the aggregate market, the energy sector now only comprises 2.9% of the S&P 500. That means the energy sector’s market cap is now smaller than Microsoft, Amazon, and Apple. The gap has widened substantially this year as Microsoft, Apple, and Amazon have shown resilience in the face of COVID-19, while the price of oil has declined precipitously.  Regardless of the cause, it is hard to decide which is more impressive, the sheer size of these mega-cap tech companies or the insignificance of the energy sector.

Chart Mega Cap Market Caps vs the Energy Sector 4 30 20

Quadrants of Possibilities

At Allegiant we are big believers of utilizing copious amounts of data as the base for our decisions. We advocate using primary sources instead of secondary opinions of the data. Most importantly, not all data is equal, and the way numbers are sliced and diced can matter greatly. As such, we pride ourselves on producing high caliber Proprietary Research that supports our mission of being our clients’ most trusted advisor.

When examining economic or market data, many times the most recent number is the focal point in analysis. However, that number is almost meaningless without viewing it in context to the bigger picture. Numbers are lonely if they are presented by themselves; more important than any singular number is how that number relates to others. This inter-relationship between numbers provides the basis for elevating raw numbers into valuable insight. 

Quadrants of Possibilities 4 22 20 Graphic Gray BackgroundWhile trying not to oversimplify the subject, we can view data in four distinct quadrants of possibilities: good and improving, good and weakening, bad and weakening, and bad and improving. 

On an absolute basis, the best possible quadrant to be in is the good and improving quadrant. Here the numbers are strong and getting even stronger. This is where the U.S. economy was in 2018. But once again, the absolute basis may not be the most insightful analysis. 

As an example, markets are generally forward-looking. So, while on an absolute basis the good and improving quadrant is the best to be in, market returns can be even stronger in the bad and improving quadrant. Why? While the numbers on an absolute basis are poor, markets have already factored these bad numbers in. The transition from a weakening to an improving situation is a key driver of future returns. And since the numbers are improving off a low base, there is lots of room for improvement.  

In today’s environment, it is important to analyze the COVID-19 outbreak, the economic impact, and investment markets separately. Controlling the virus is the first battle. Only then can the economy recover. Investors will try to gauge both of these situations and price markets accordingly, often in advance of the confirming data releases. 

The 2020 Giving Challenge returns tomorrow! The virtual 24-hour event which helps raise money for local nonprofit organizations occurs from noon to noon on April 28-29, 2020.

This year the Patterson Foundation is matching donations up to $100 with a 1:1 match. So, if you give $100 to your favorite nonprofit organization, the Patterson Foundation matches with another $100. Matches are made on a per-person, per-nonprofit basis.  Therefore, if two separate people from the same household give, the Patterson match can be effectively doubled. As a company and team, Allegiant has already committed to contributing at least $50,000 in gifts to nonprofits through this year’s Giving Challenge.

Kristina Eastmond Director of Client Services Allegiant Private Advisors

By Kristina Eastmond
Principal, Director of Client Service

If you could go back to the moment on New Years Eve when you thought about the year ahead with excitement, I am sure, like me, you now are saying to yourself, “This is not exactly what I imagined!”  So much has changed, for all of us, in one way or another, in so little time.  Many in our community have been hit hard while others count their blessings that it isnt worse.  In order to move forward and navigate this new normal, we must all try to keep our heads above the fear and focus on what is important.  

The world as we know it is at a standstill and Im feeling that a shift is taking place in not only the way we look at the world but how we look at ourselves and each other.  The little things for me are now the big things, and the things I own, my possessions, are simply collecting dust and have less value than ever before. My personal relationships have been renewed and recharged and we are all starting to really reconnect with our loved ones again.  They may drive us crazy now and then (it’s ok to admit it) BUT at the end of the day we still somehow feel grateful.  As we all personally continue to do our part to keep our community and those we love safe and healthy, the Allegiant team remains steadfast and vigilant to our commitment to all of you, our dear clients.  We may be working remotely during this crisis, but that only affects the way we do things; not the quality of what we deliver.

You have heard a lot from the Wealth Advisor and Investment Research teams and they are doing a phenomenal job in keeping the lines of communication open, proactively reaching out to listen to your needs and most importantly, keeping your investment plan in line with your long-term goals.  When you think about why you plan for the future, it is for the unknown, the what-ifs - this crisis is that moment.  It has put your financial plans to the test and only highlights how important it is to plan and have a thinking partner that you can trust. 

A big part of the Allegiant family that can be somewhat behind the scenes is the Client Service team which I proudly lead. Helen, Lynda, Karen, Karyn and I work hard every day to keep our smiles big and service levels high!  Just as you have made adjustments in your daily life to keep things as normal as possible, we too are adapting.  It is our hope that we havent missed a beat and that these adjustments are unnoticeable as we continue delivering the personalized service you expect and deserve. 

Technology to the Rescue

Social distancing has pushed us further into an online and electronic world and I feel this is the perfect time for you to become more familiar and comfortable with the various online tools we have available to communicate with each other and conduct business together.   Not only are these tools easy to use, they also protect your privacy which is extremely important to all of us.